PUBLIC NOTICE FEDERAL COMMUNICATIONS COMMISSION 1919 M STREET, N.W. WASHINGTON, D.C. 20554 DA 96-1986 News media information 202/418-0500 Fax-On-Demand 202/418-2830 Internet: http://www.fcc.gov ftp.fcc.gov CABLE SERVICES ACTION November 27, 1996 INFLATION ADJUSTMENT FIGURES FOR CABLE OPERATORS USING FCC FORMS 1210 AND 1240 NOW AVAILABLE Under Commission rules, cable operators may adjust the non-external cost portion of their rates for inflation. 47 C.F.R.  76.922(d)(2). For operators filing FCC Form 1210, an annual adjustment may be made based on inflation occurring from June 30 of the previous year to June 30 of the year in which the inflation adjustment is made. For operators filing FCC Form 1240, adjustment may be made based on quarterly figures. All adjustments are based on changes in the Gross National Product Price Index ("GNP-PI") as published by the Bureau of Economic Analysis (BEA) of the United States Department of Commerce. The indexes used, the Gross National Product: Chain-type price indexes, were obtained from Table 4 of the BEA news release dated September 27, 1996 (BEA 96-32). FCC Form 1210 The inflation factor for the 12 months ended June 30, 1996 is 1.0214. Operators that wish to take this year's inflation adjustment using FCC Form 1210 should enter the figure 1.0214 on Lines I5 and J5 of the form. This year's inflation adjustment is calculated by taking the GNP-PI from the second quarter of 1996 (109.6) and dividing by the GNP-PI for the second quarter of 1995 (107.3). Operators may take this year's inflation adjustment between October 1, 1996 and August 31, 1997. Since the 1995 inflation figure for FCC Form 1210 filers was released, BEA revised its method for calculating price indexes. It now uses a chain weighted method in place of the fixed weighted method. BEA has determined that the chain weighted method produces more accurate results. The index at the end of the second quarter of 1995, previously reported under the fixed weighted method at 132.2, is no longer applicable for measuring price changes over the 12 month period ending June 30, 1996. The restated index at June 30, 1995 under the chain weighted method is 107.3. FCC Form 1240 The Second Quarter 1996 Inflation Factor for operators using FCC Form 1240 is 1.0222. The adjustment factor of 1.0222 is a measure of the annualized change in prices occurring over the period from April 1, 1996 to June 30, 1996. The inflation adjustment factor is calculated by taking the GNP-PI from the second quarter of 1996 (109.6) and dividing by the GNP-PI for the first quarter of 1996 (109.0). The result of this calculation is converted from a quarterly change measurement factor to an annual change measurement factor by raising it to the fourth power. Operators calculating the Inflation Factor for a True-Up Period which includes some portion of the second quarter of 1996 should enter the inflation factor on the appropriate lines of Worksheet 1 of FCC Form 1240 as "0.0222". Operators using this factor for calculating the Projected Period Inflation Segment of FCC Form 1240 should enter this number on Line C5 as "1.0222". Commission releases of inflation indexes and inflation adjustment factors for use on FCC Form 1240 have consistently been based on the chain-type indexes. To date the Commission has released four quarterly inflation factors for use with FCC Form 1240. The following table lists these factors: Year Quarter Dates Covered Inflation Factor 1995 Third Jul. 1, 1995 - Sep. 30, 1995 2.22% 1995 Fourth Oct. 1, 1995 - Dec. 31, 1995 2.22% 1996 First Jan. 1, 1996 - Mar. 31, 1996 2.39% 1996 Second Apr. 1, 1996 - Jun. 30, 1996 2.22% The Commission releases a new quarterly inflation factor for operators using FCC Form 1240 four times each year. The inflation factor for a given quarter is usually released between three and four months after the end of the quarter, depending on the schedule of the Department of Commerce. The release of a new factor is posted on the Commission's Internet site at: http://www.fcc.gov/Bureau/Cable/WWW/csb.html. Media contact: Morgan Broman (202) 418-2385. Cable Services Bureau contact: Hugh Boyle (202) 418-7200. --FCC--